How to file a life insurance benefit claim

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Life insurance benefits are not automatic. If you are the beneficiary of a life insurance policy, you must file a claim to receive the money. There are a number of key steps to take following the death of spouse in order to claim the life insurance proceeds.

Notify the insurance company that the policyholder has died
When your spouse dies, you should notify his or her life insurance company as soon as possible. You can call the insurance company’s policyholder services department directly, or if the policy was issued through an agent, you can ask them to notify the company for you to begin the claims process.

File a claim form
You’ll begin the process by filling out and signing a proof of death form and attaching it to an original or certified copy of the policyholder’s death certificate. If you are too distraught to fill out the form yourself, your insurance agent may fill it out for you, although you’ll need to sign it. If there is another beneficiary named on the policy, that person must also fill out a claim form. You may also need to fill out Form W-9, which will enable the insurance company to notify the IRS of any interest it has paid to you on the value of your policy.

Wait for the company to process the claim
Life insurance claims are usually paid quickly, often within a few days. First, however, the insurance company will ensure you are the beneficiary of the policy, the policy is current and in force, and all conditions of the policy have been met. This is usually a simple matter and does not delay the claims process. Claims are more often delayed because the insurance company has not received a valid death certificate. The insurance company also has a right to challenge or deny a claim if it believes a policy provision has been violated.

Receiving life insurance proceeds

Lump-sum cash payment
Life insurance proceeds are often paid as lump-sum cash payments. As the beneficiary, you will receive the full value of the policy in a lump sum. Most people elect this form of payment because it enables them to control how the insurance money is invested or spent. If you elect to receive a lump-sum payment, you generally will not owe income tax on the life insurance proceeds.

Settlement options
Many types of settlement options are available, but all are designed to ensure good money management in situations where the beneficiary is unable or unwilling to manage a lump sum of cash. When a settlement option is chosen, the insurance company keeps the policy proceeds, invests them, and pays interest to the beneficiary. Sometimes, the beneficiary is allowed to withdraw part of the proceeds, and sometimes, periodic payments of both principal and interest are made. Either the policyholder chooses the settlement option at the time he or she purchases the policy, or the beneficiary chooses the option at the time the benefit becomes payable.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

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